IN Brief:
- SHS is investing €4.6bn in Power4Steel at Dillingen and Völklingen, supported by €2.6bn of federal and state funding.
- Around 120 buildings and structures are planned, with the first completed and major above-ground construction now under way.
- The programme centres on a roughly 140-metre direct reduction plant and two electric arc furnaces forming a new steelmaking route.
SHS – Stahl-Holding-Saar has moved its €4.6bn Power4Steel programme into a major above-ground construction phase, with structural work becoming increasingly visible across the Dillingen and Völklingen steelmaking sites.
The transformation involves around 120 buildings and structures across the two industrial complexes. SHS says the first have already been completed following extensive preparatory and foundation works, while construction is now rising on the principal process facilities.
The most prominent will be a new direct reduction iron plant at Dillingen, designed to reach around 140 metres in height. It forms the centre of a production route intended to replace a substantial proportion of conventional blast furnace and converter steelmaking with direct reduction and electric arc furnace technology.
Power4Steel is one of Europe’s largest industrial decarbonisation construction programmes. SHS is investing €4.6bn across the transformation, with €2.6bn in support from Germany’s federal government and the Saarland state government.
The headline process equipment accounts for only part of the site workload. A direct reduction plant and electric arc furnaces require foundations, structural frames, utilities, electrical infrastructure, material handling systems, control equipment, access, and connections with existing production assets.
That supporting construction is spread across operational steelworks rather than a cleared greenfield site. Existing production at Dillingen and Völklingen has to continue while new structures, process equipment, services, and logistics routes are introduced around it.
The direct reduction installation at Dillingen is designed for annual production of around two million tonnes of directly reduced iron. Earlier SHS project information identified Midrex Flex technology for the plant, allowing the process to operate with varying proportions of natural gas and hydrogen as the supply of lower-carbon hydrogen develops.
Primetals Technologies, Midrex Technologies, and DSD Steel Group are involved in the direct reduction package. Two electric arc furnaces form the other main elements of the new production route, with installations planned at Dillingen and Völklingen.
SHS expects the new route to support around 3.5 million tonnes of steel production annually once the principal facilities are operating. The first transformation stage is intended to convert around 70% of existing production capacity to the lower-carbon process.
The shift from foundations into superstructure changes the construction profile materially. Early civil works can occupy large areas and consume substantial concrete and reinforcement, but vertical construction brings a denser combination of structural, mechanical, electrical, and process packages onto the programme.
Large lifting operations, temporary works, delivery routes, site compounds, and shutdown coordination become increasingly important as heavy equipment begins to arrive. Existing production also limits where contractors can store components or divert site traffic, leaving less flexibility than on a standalone industrial development.
The approximately 140-metre direct reduction structure will provide the clearest visual measure of progress, but the wider programme is distributed across both plants. Equipment installed at the two locations has to operate as part of a common steelmaking system, linking direct reduced material, recycled scrap, melting, casting, and downstream production.
That makes interface management as important as individual building progress. A delayed utility connection, electrical package, process building, or material handling system can restrict commissioning even where the principal plant itself appears structurally complete.
SHS placed major equipment orders after extensive preliminary engineering. That front-loaded design work becomes increasingly important during construction because alterations to process equipment can cascade into foundations, steelwork, services, access, and plant logistics.
The transformation is also dependent on infrastructure outside the immediate construction boundary. The direct reduction process is intended to increase its use of hydrogen over time, tying the operational performance of the completed works to development of regional hydrogen supply.
SHS expects the first stage of Power4Steel to reduce carbon dioxide emissions by around 55% by 2030 compared with the existing production route, while the longer-term objective is climate-neutral steel production by 2045. Those targets depend on the new plant entering service alongside sufficient lower-carbon energy and hydrogen supply.
The construction programme therefore carries both industrial and policy dependencies. Delays to individual packages can affect commissioning across the wider production system, while the scale of public support increases scrutiny of delivery milestones and the eventual emissions performance of the new facilities.
The current phase is significant because it provides physical evidence that the programme has progressed beyond enabling works. SHS’s 28 September update confirmed that the first structures are complete and that the transformation is now moving visibly upwards after the foundation programme.
With roughly 120 buildings and structures planned across Dillingen and Völklingen, however, the appearance of the first completed assets marks the beginning of a more intensive stage rather than the end of the construction challenge. The next period will be dominated by structural completion, equipment installation, services integration, and preparation for commissioning across two live steelworks.
